This article first appeared on the website of the Thought Leaders4 Competition and is reproduced with its kind permission.
A below-threshold merger - also referred to as a non-notifiable deal - is one that falls below the filing thresholds set by merger control regimes. Historically, such transactions were considered low-risk from a regulatory standpoint. That assumption is no longer safe as regulators are asserting jurisdiction over deals that would once have been untouched. Although the driving concern is the issue of “killer acquisitions”, it is increasingly difficult to identify which deals may be called in or the subject of ex post enforcement action and this difficulty will only increase as approaches diverge.
At the EU level, the picture is shaped significantly by the Court of Justice’s well-known ruling in Illumina/GRAIL (2024), which curtailed the European Commission’s (“EC”) ambitions for extending its reach over below-threshold transactions. The EC claimed jurisdiction to review Illumina’s acquisition of GRAIL under Article 22 EUMR, asserting that a Member State can refer a deal to the EC even if it falls below filing thresholds. The EC had been pursuing this policy for several years, arguing that it enables review of so-called “killer acquisitions” (the acquisition of an innovative start-up by a larger company) which otherwise often escape scrutiny due to the target’s size. The Court rejected this, noting that it would undermine the predictability and legal certainty that must be provided to businesses. This was a welcome development, but the ruling did not impact the ability of national authorities to introduce or exercise below-threshold call-in powers to assess the competitive effects of a deal in their jurisdiction. Indeed, there has been significant activity on that front.
Read the full article (pages 19-20).